U.S. Job Openings Fell to Lowest in 9 Months in June as Labor Market Cooled

By Geoffrey Smith

Investing.com -- The number of vacancies across the U.S. fell more sharply than expected in June to its lowest level since September, suggesting that the labor market was cooling significantly even before a raft of corporate hiring freezes or slowdowns announced over recent weeks.

The nationwide number of open positions fell to 10.698 million in June from an upwardly revised 11.303 million in May, the Labor Department said on Tuesday in its Job Openings and Labor Turnover Survey for June. While that's still a high number in comparison with much of recent history, it's down clearly from a record high of 11.855 million in March and was well short of the 11.000 million expected by analysts ahead of time.

The scale of the decline is all the more surprising in the light of June's employment report, which still showed job growth continuing at a historically high rate.

"Openings are still well above pre-pandemic levels, but the slowdown is very clearly affecting the job market now," said Daniel Zhao, lead economist with Glassdoor, via Twitter. He pointed to a particularly sharp drop in retail vacancies, which fell by 29% from a month earlier. That tallied with a series of warnings from U.S. retailers at the end of the second quarter about the need to focus on keeping a lid on costs, after seeing inflation eat into sales and profit margins.

Zhao also noted that the ratio of open jobs to available workers also fell clearly to 1.8. While the reliability of that metric has been questioned in the past, Zhao noted that it's been highlighted several times by Federal Reserve Chairman Jerome Powell in the context of the Fed's efforts to cool the labor market.

The Labor Department also noted in its report that the number of people quitting their jobs only edged down marginally to 4.2 million from 4.3 million in May. That suggests a still-high level of confidence in people's ability to find better-paying jobs elsewhere.

The figures set the stage for a pivotal July employment report on Friday. If hiring slows at the rate that vacancies are now slowing, then market confidence that the Federal Reserve will soon be forced to reverse this year's interest rate hikes will likely grow significantly. Economists expect nonfarm employment to have risen only 250,000 last month, which would be the slowest rate of hiring this year.